MetLife 2008 Annual Report Download - page 200

Company eliminated certain assets and liabilities held in connection with the pension business. Deferred acquisition costs deferred tax
assets, and liabilities — primarily the liability for future servicing obligation referred to above — were eliminated and the Company incurred
severance costs associated with the termination of employees. The impact of the elimination of assets and liabilities and the incurral of
severance costs was an increase to net income of $6 million, net of income tax, during the year ended December 31, 2008.
In September 2008, the Argentine Supreme Court ruled against the validity of the 2002 Pesification Law enacted by the Argentine
government. This ruling applied to certain social security pension annuity contractholders that had filed a lawsuit against the 2002
Pesification Law. The annuity contracts impacted by this ruling, which were deemed peso denominated under the 2002 Pesification Law,
are now considered to be U.S. dollar denominated obligations of the Company. Contingent liabilities that were established at acquisition in
2005 in connection with the outstanding lawsuits have been adjusted and refined to be consistent with the ruling. The impact of the
refinements resulting from the change in these contingent liabilities and the associated future policyholder benefits was an increase to net
income of $34 million, net of income tax, during the year ended December 31, 2008.
As part of Nationalization, the Company may receive compensation from the Argentine government for the loss of the pension business
in the form of government bonds. The amount of any such compensation, as well as the terms and value of the government bonds to be
received, cannot be determined at this time. The compensation will only be reflected in the consolidated financial statements of the
Company if and when the fair value of the compensation is received.
Further governmental or legal actions are possible in Argentina. Such actions may impact the level of existing liabilities or may create
additional obligations or benefits to the Company’s operations in Argentina. Management has made its best estimate of its obligations
based upon information currently available; however, further governmental or legal actions could result in changes in obligations which
could materially impact the amounts presented within the consolidated financial statements.
Commitments
Leases
In accordance with industry practice, certain of the Company’s income from lease agreements with retail tenants are contingent upon
the level of the tenants’ sales revenues. Additionally, the Company, as lessee, has entered into various lease and sublease agreements for
office space, data processing and other equipment. Future minimum rental and sublease income, and minimum gross rental payments
relating to these lease agreements are as follows:
Rental
Income Sublease Income
Gross
Rental
Payments
(In millions)
2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $431 $15 $ 278
2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $391 $11 $ 247
2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $314 $11 $ 213
2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $246 $11 $ 171
2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $206 $11 $ 152
Thereafter.................................................... $724 $34 $1,080
During the fourth quarter of 2008, the Company moved certain of its operations in New York from Long Island City to New York City. As a
result of this movement of operations and current market conditions, which precluded the Company’s immediate and complete sublet of all
unused space in both Long Island City and New York City, the Company incurred a lease impairment charge of $38 million which is included
within other expenses in Corporate & Other. The impairment charge was determined based upon the present value of the gross rental
payments less sublease income discounted at a risk-adjusted rate over the remaining lease terms which range from 15-20 years. The
Company has made assumptions with respect to the timing and amount of future sublease income in the determination of this impairment
charge. Additional impairment charges could be incurred should market conditions deteriorate further or last for a period significantly longer
than anticipated.
Commitments to Fund Partnership Investments
The Company makes commitments to fund partnership investments in the normal course of business. The amounts of these unfunded
commitments were $4.5 billion and $4.2 billion at December 31, 2008 and 2007, respectively. The Company anticipates that these
amounts will be invested in partnerships over the next five years.
Mortgage Loan Commitments
The Company has issued interest rate lock commitments on certain residential mortgage loan applications totaling $8.0 billion at December 31, 2008. The
Company intends to sell the majority of these originated residential mortgage loans. Interest rate lock commitments to fund mortgage loans that will be held-for-
sale are considered derivatives pursuant to SFAS 133, and their estimated fair value and notional amounts are included within financial forwards in Note 4.
The Company also commits to lend funds under certain other mortgage loan commitments that will be held-for-investment. The
amounts of these mortgage loan commitments were $2.7 billion and $4.0 billion at December 31, 2008 and 2007, respectively.
Commitments to Fund Bank Credit Facilities, Bridge Loans and Private Corporate Bond Investments
The Company commits to lend funds under bank credit facilities, bridge loans and private corporate bond investments. The amounts of
these unfunded commitments were $1.0 billion and $1.2 billion at December 31, 2008 and 2007, respectively.
Guarantees
In the normal course of its business, the Company has provided certain indemnities, guarantees and commitments to third parties
pursuant to which it may be required to make payments now or in the future. In the context of acquisition, disposition, investment and other
transactions, the Company has provided indemnities and guarantees, including those related to tax, environmental and other specific
F-77MetLife, Inc.
MetLife, Inc.
Notes to the Consolidated Financial Statements — (Continued)